The provisions in the Act of July 17, 1870, 16 Stat. 291 (on
page 305), that the lands granted to the Northern Pacific Railroad
Company by the act of July 2, 1864, 13 Stat. 365, shall not be
conveyed to the company or any party entitled thereto
"until there shall first be paid into the Treasury of
Page 115 U. S. 601
the United States the cost of surveying, selecting, and
conveying the same by the company or party in interest"
exempts these lands from state or territorial taxation until
such payment is made into the Treasury.
The Northern Pacific Railroad Company has acquired no equitable
interest in the lands so granted to it by reason of completing its
road and thus earning the granted lands, which is subject to state
or territorial taxation before such payment is made into the
Treasury of the United States.
When an act granting public lands to aid in the construction of
a railroad provides that patents shall issue from time to time, as
sections of the road are completed, but reserves to Congress the
right at any time "to add to, alter, amend, or repeal this act, . .
. having due regard for the rights of the company," Congress may,
without violating the Constitution of the United States, by
subsequent act passed before any of the road is constructed or any
of the land earned, require the cost of surveying, selecting, and
conveying the land to be paid into the Treasury of the United
States before the conveyance of the granted lands to any party
entitled thereto.
The principles on which
Railway Co. v.
Prescott, 16 Wall. 603, and
Railway
Co. v. McShane, 22 Wall. 444, were decided, are
restated, so far as they are applied to this case.
Suit to enjoin the collection of taxes levied upon lands of
plaintiff in error. A jury being waived, the court made a finding
of facts of which the following are the material ones in view of
the opinion of the Court.
First. That the plaintiff is a corporation duly organized and
existing under that certain Act of Congress, approved July 2, 1864,
entitled
"An Act granting land to aid in the construction of a railroad
and telegraph line from Lake Superior to Puget Sound on the Pacific
Coast by the northern route, and under those certain subsequent
acts and joint resolutions of Congress relating to the same subject
matter."
Second. That in and by the said Act of July 2, 1864, among other
things, it is provided as follows:
"And be it further enacted that there be and hereby is granted
to the Northern Pacific Railroad Company, its successors and
assigns, for the purpose of aiding in the construction of said
railroad and telegraph line, . . . alternate sections of public
land, not mineral, designated by odd numbers, to the amount of 20
alternate sections per mile on each side of said railroad line as
said company may adopt, through the territory of the United States,
and 10 alternate sections of land per mile on each side of said
railroad whenever it passes through any
Page 115 U. S. 602
state,"
etc. Then follow the conditions subsequent to be performed by
the said railroad company to give it a complete title to the said
lands, and to a patent as the evidence of such title.
By an Act of Congress approved July 15, 1870, among other
things, appropriating money for the survey of the public lands
within the limits of the land grant of the Northern Pacific
Railroad Company, it is provided
"that before any land granted to said company by the United
States shall be conveyed to any party entitled thereto under any of
the acts incorporating or relating to said company, there shall
first be paid into the Treasury of the United States the cost of
surveying, selecting, and conveying the same by the said company or
party in interest."
Third. That under and in pursuance of said several acts and
resolutions of Congress, the plaintiff has built and caused to be
built and put in operation a continuous line of railroad and
telegraph extending from the waters of Lake Superior, at Duluth, in
the State of Minnesota, westerly across the said state and across
the Territory of Dakota to and beyond the Missouri River, and of
the character and materials specified in the said acts, and
everything has been done by the said railroad company required by
the terms of the grant to enable the said company to acquire a
complete and perfect title to the lands in controversy in this
action except as respects the payment of the cost of survey,
&c., required by the Act of July 15, 1870, above mentioned. All
that part of the said railroad within the Territory of Dakota has
been located and built since July 15, 1870. The government of the
United States, since the passage of the said Act of Congress of
July 15, 1870, has
Page 115 U. S. 603
caused the lands described in the complaint to be surveyed at
its own expense, no part of which has ever been repaid it by said
company. The patents for the said lands described in the complaint,
or any of them, have never been issued to the said railroad
company, or to any person for said company, and the government
refuses to issue said patents until the payment for survey and
selecting the said lands, as above mentioned, and required by said
law of 1870, has been made.
Fourth. That the lands mentioned and described in the schedule
annexed to the plaintiff's complaint and made a part thereof were,
at the time said acts were passed, and the said railroad located
through the Territory of Dakota, a part of the public domain of the
United States, and not any part of the right of way mentioned in
said act, and had never been sold, reserved, granted, or otherwise
appropriated except as above mentioned, and were free of preemption
and other rights, and were situated within a distance of 40 miles
of the line of the plaintiff's said railroad.
Fifth. That in the year 1880, the officers of the said County of
Traill authorized by the laws of this territory to assess property
therein for the purposes of taxation and to levy taxes therein,
assessed and levied taxes upon said land for that year amounting in
the aggregate to about the sum of $2,000, all of which remain
unpaid, and which the plaintiff refused and still refuses to pay,
and the defendant Iver L. Rockne, who is County Treasurer of said
County of Traill, did advertise and give public notice that on a
certain day and place, to-wit, on the first Monday in October,
1881, he would sell the said lands according to law for the
nonpayment of the said taxes and for the collection of the
same.
Judgment for defendant, which was affirmed on appeal in the
supreme court of the territory. Plaintiff below appealed to this
Court.
Page 115 U. S. 606
MR. JUSTICE MILLER delivered the opinion of the Court.
This is an appeal from a decree of the Supreme Court of the
Territory of Dakota. A suit was brought by the appellant in the
District Court of Traill County for the purpose of enjoining the
authorities of that county from enforcing the collection of taxes
assessed on lands of the company on the ground that, by law and the
acts of Congress to be hereafter considered, they were not subject
to taxation. The district court made a finding of the facts in the
case, on which it declared the law to be for the defendant and
dismissed the bill. On appeal to the supreme court of the
territory, the case was twice argued, and, though the membership of
that court was changed by the substitution of two new judges for
two retiring judges between the two hearings, the court was, in
each instance, equally divided, and the judgment it rendered of
affirmance had but the assent of two judges out of the six who had
heard it argued.
The railroad company claims that the lands in question are not
taxable under the decisions of this Court in the cases of
Railway Co. v.
Prescott, 16 Wall. 603, and
Railway
Co. v. McShane, 22 Wall. 444.
In those cases taxes levied on lands granted by Congress to aid
in building the roads were held to be void by reason of the fact
that neither the companies nor any one for them had paid
Page 115 U. S. 607
to the United States the costs of surveying those lands by the
government. The taxes in the first case had been levied by
authorities of the state, under the laws of Kansas, and in the
second by like authorities of the state of Nebraska.
These lands had originally been granted to the Union Pacific
Railroad Company and other companies, to aid in building a road
from the Iowa state line to the Pacific ocean, by an Act of
Congress approved July 1, 1862. The company to which the grant was
made for the branch of the road in Kansas was already in existence,
and the company which received the grant to build the main road,
namely, the Union Pacific Railroad Company, was chartered by this
act, and the corporators immediately organized under it. In the
year 1864, July 2, Congress, by an amendatory act, made additional
grants to the companies, and made several changes in the charter or
original act, one of which, found in § 21, reads as follows:
"That before any land granted by this act shall be conveyed to
the said company or party entitled thereto, . . . there shall first
be paid into the Treasury of the United States the cost of
surveying, selecting, and conveying the same, by said company or
party in interest, as the titles shall be required by said
company."
13 Stat. 365.
In the case of
Railway Co. v. Prescott, which was a
writ of error to the Supreme Court of Kansas, this Court held these
lands could not be assessed and sold for taxes under state laws
until this cost of surveying them was paid to the United States,
because the government retained the legal title to the same to
compel this payment. The case was decided in 1872.
In 1874, the case of
Railway Co. v. McShane came before
us, involving the same question, and because it also involved some
other points decided in
Railway Co. v. Prescott, which the
Court reconsidered and overruled, it necessarily received full
consideration, the result of which was to reaffirm the proposition
that until the United States was reimbursed for the expenses of the
survey of those lands, they were not subject to state taxation.
By an act approved also July 2, 1864, 13 St. 365, Congress
passed a law chartering the Northern Pacific Railroad Company
Page 115 U. S. 608
to construct a road from Lake Superior to Puget's Sound, on the
Pacific Coast, by the northern route, and made a munificent grant
of the public lands to aid in this construction. The terms of the
grant and its conditions were much the same as the original grant
of 1862 to the Union Pacific Company and its branches. It contained
the following provisions:
"SEC. 20.
And be it further enacted that the better to
accomplish the object of this act, namely, to promote the public
interest and welfare by the construction of said railroad and
telegraph line, and keeping the same in working order, and to
secure to the government at all times (but particularly in time of
war) the use and benefits of the same for postal, military, and
other purposes, Congress may at any time, having due regard for the
rights of said Northern Pacific Railroad Company, add to, alter,
amend, or repeal this act."
P. 372.
And in 1870, when making the appropriation for the survey of
these lands within the limit of the grant to the Northern Pacific
Railroad Company, Congress added this proviso:
"That before any land granted to said company by the United
States shall be conveyed to any party entitled thereto under any of
the acts incorporating or relating to said company, there shall
first be paid into the Treasury of the United States the cost of
surveying, selecting, and conveying the same by the company or
party in interest."
16 Stat. 305. It will be seen that this language is almost
identical with § 21 of the act of 1864 concerning the lands granted
to the Union Pacific Company, which was construed in
Railway
Co. v. Prescott and in
Railway Co. v. McShane. As the
principle of the exemption of these lands from taxation until the
costs of surveying them was paid received the full consideration of
the court in two cases argued and decided two years apart, and as
it received the unanimous approval of the court, it must govern the
present case unless a distinction can be shown.
Such distinction is relied on, and has received the support of a
decision of the Supreme Court of Minnesota in the case of
Cass
County v. Morrison, 28 Minn. 257. It is there held that the
company having built its road and earned the lands, had thereby
acquired a complete equitable title, with right to demand
Page 115 U. S. 609
a patent, though the costs of survey had not been paid, and this
equitable title was subject to taxation. It was also held that
because the requirement to pay these costs was made in 1870, six
years after the original grant, it was void as an unconstitutional
exercise of power by Congress.
But we think that the clause authorizing Congress "to add to,
alter, amend, or repeal the act of 1864," clearly conferred this
power on Congress, especially when exercised, as in this instance,
before the company had built a mile of road, or earned an acre of
land, or in any other manner secured an equitable right to the
lands.
Sinking Fund Cases, 99 U. S.
700,
99 U. S.
719.
But this very question, in a little different form, was raised
and decided in
Railway Co. v.
Prescott, 16 Wall. 603. In that case, the original
grant, made in 1862, contained no provision about the payment of
the costs of survey. The act of 1864, which did contain this
provision, added very largely to the area of the land granted by
the act of 1862, and the opening sentences of the opinion state the
proposition whether the requirement that the costs of surveying
must be paid before the patent shall issue covers all of both
grants or only that of 1864, and it is held that it covers both. We
think this governs the present case. Independently of the clause of
the act of 1864 authorizing amendments, additions, and repeals, we
think that until the lands were earned, and other acts that the law
demanded that the company should do had been done, it had no such
right in the lands as would prevent Congress from passing a
remedial provision so eminently just as the one under
consideration.
Again, it is said that, since the road was built before this tax
was levied and the company had earned the land, its equitable title
was complete, and, according to the decisions of this Court, it was
subject to taxation.
The same point was urged in
Railway Co. v. Prescott.
But the Court said that
"this doctrine was only applicable to cases where the right to
the patent is complete, the equitable title fully vested, without
anything more to be paid or any act to be done going to the
foundation of the right."
But it added in that case that two important acts remained to be
done, the
Page 115 U. S. 610
failure to do which might wholly defeat the company's title. One
of these was payment of the costs of surveying.
It may be well to restate the grounds on which this decision
rests.
The United States made a magnificent grant to this company of
lands equal in quantity to forty or fifty thousand square miles, an
area as large as an average state of the Union. It thought proper
to require of the grantee the payment of the costs of making the
surveys necessary to the location and ascertainment of these lands.
To secure the payment of those expenses, it decided to retain the
legal title in its own hands until they were paid. The government
was, as to these costs, in the condition of a trustee in a
conveyance to secure payment of money. But if the land was liable
to be sold for taxes due to state, territorial, or county
organizations, this security would be easily lost.
No sale of land for taxes, no taxes can be assessed on any
property, but by virtue of the sovereign authority in whose
jurisdiction it is done. If not assessed by direct act of the
legislature itself, it must, to be valid, be done under authority
of a law enacted by such legislature. A valid sale, therefore, for
taxes, being the highest exercise of sovereign power of the state,
must carry the title to the property sold, and if it does not do
this, it is because the assessment is void.
It follows that if the assessment of these taxes is valid and
the proceedings well conducted, the sale confers a title paramount
to all others, and thereby destroys the lien of the United States
for the costs of surveying these lands. If, on the other hand, the
sale would not confer such a title, it is because there exists no
authority to make it.
At all events, the holder of the equitable title to these lands
has a right to prevent a sale which would have the effect of
impeding the United States in the assertion of her right to them
until these costs are paid.
We are aware of the use being made of this principle by the
companies, who, having earned the lands, neglect to pay these costs
in order to prevent taxation. The remedy lies with Congress, and is
of easy application. If that body will take steps
Page 115 U. S. 611
to enforce its lien for these costs of survey, by sale of the
lands or by forfeiture of title, the Treasury of the United States
would soon be reimbursed for its expenses in maxing the surveys,
and the states and territories, in which the lands lay, be remitted
to their appropriate rights of taxation. The courts can do no more
than declare the law as it exists.
The decree of the Supreme Court of the Territory of Dakota
is reversed, and the cause remanded with directions to cause a
decree to be entered perpetually enjoining the treasurer of Traill
County from any further proceeding to collect the taxes in the bill
mentioned.
